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transfennica

Transfennica v. Schenker, the system of articles 17 and 23 CMR

The CMR provides a mandatory system of liability that balances the interests of the carrier on the one hand and the sender/consignee on the other. Article 17 CMR gives the main (liability) rule: the carrier is liable for any damage to or loss of the goods in his care pursuant to article 17 (1) CMR, unless he can rely on one of the conventional exemptions of liability listed in article 17 (2) and (4) CMR.[1]

If the carrier is indeed liable under the convention, his financial exposure is limited by article 23 (1), (2) and (3) CMR. The carrier’s liability is first of all limited to the shipment value of the goods, and furthermore limited to 8.33 SDR/KG. The carrier will still have to pay the carriage charges, customs duties and other charges, but article 23 (4) CMR explicitly prescribes that ‘no further damage shall be payable.’

Obviously, this mandatory system of liability only governs the contract of carriage if the convention applies.[2] If the convention does not apply, the carrier’s liability is governed by the domestic law applicable to the contract of carriage.[3] The Dutch Supreme Court has recently held in Transfennica v. Schenker that the CMR does not apply to other damages than those to the goods carried, and that the carrier is unlimitedly liable for such losses under Dutch domestic law.[4]

The facts of the case

In September 2010 Schenker BV instructed Transfennica to carry a shipment of Nokia products from Roosendaal (the Netherlands) to Hamina (Finland). Schenker BV acted at that time as sub-carrier for Schenker OY who had in turn been instructed by Nokia to carry the goods from Roosendaal to Moscow (Russia).

The shipment was loaded into 10 containers on 11 September 2010. These containers all had different numbers, and the cargo in each container had an individual loading reference number. On 13 September 2010, when the goods were already well on their way from Roosendaal to Hamina, Schenker asked Transfennica for the respective loading reference numbers. Transfennica complied with the request, but made a mistake in the process. It accidently switched the reference numbers of two of the containers, and thus provided Schenker with incorrect information.

The goods arrived in Hamina on 17 September 2010 in good condition. Schenker OY instructed sub-carriers Contento OY and JSP Cargo OY to carry the goods from Hamina to Moscow. When the sub-carriers arrived at the Finland/Russia border two of the containers were stopped by the Russian authorities. The weight of these two containers did not match the information in the TIR-carnets (mentioning the incorrect loading reference information as provided by Transfennica). The containers were stored in transit pending a decision of the Russian court. The containers were ultimately released several months later and the two sub-carriers were fined. Schenker (OY) reimbursed the two sub-carriers for the fines. It also paid the storage costs in Russia, the truck demurrage and clearance costs.

Transfennica sent its invoice for the freight of EUR 23,200 to Schenker on 21 September 2010, but Schenker refused to pay the amount. Instead, it presented Transfennica with a claim for EUR 82,633.27 covering all the costs incurred as a result of the incorrect information. Transfennica sued Schenker for payment of the freight; Schenker filed a counterclaim for the costs.

Transfennica and Schenker agreed that the goods themselves had not been damaged in the course of the voyage,[5] and it was furthermore undisputed that the counterclaim did not relate to ‘carriage charges, customs duties and other charges’ in the sense of article 23 (4) CMR either.[6] Ultimately, the discussion of the parties centered around the question whether these fines and costs were subject to the liability regime of the CMR.[7]

The Cargofoor precedent

The key question in Transfennica v. Schenker was not entirely without precedent. A similar question had already surfaced in RTT v. Cargofoor.[8] The circumstances of the two cases were slightly different though.[9]

Eastman had instructed RTT, and RTT had in turn instructed Cargofoor, to carry a shipment of anhydride acids by road from Rotterdam (the Netherlands) to Tubize (Belgium). Cargofoor had failed to adequately clean the inside of the tank truck, and as a result the acids were contaminated during the voyage. Unfortunately, the contamination had not been discovered by the time the truck arrived at the agreed destination, and Cargofoor discharged the acids in an already half full land tank. Consequently, the contaminated cargo in the truck in turn contaminated the acids in the land tank.

RTT reimbursed its principal Eastman for the damages, subrogated into its rights, and sued Cargofoor in tort. Cargofoor immediately accepted liability for the contamination of the acids in the truck, but denied liability for the contamination of the acids in the land tank. Cargofoor relied on articles 28 (1) and 23 (4) CMR; it argued that the convention applied even though the claim was extra-contractual, and that it could therefore not be liable for the contamination of the acids in the land tank as article 23 (4) stipulated that ‘no further damage shall be payable.’[10] The Court of Appeal disagreed,[11] and so did the Supreme Court:[12]

‘The CMR does not provide for an exhaustive regulation of the carrier’s liability. Article 17 only regulates the carrier’s liability for the loss of or damage to goods that were carried by him, as well as for any delay in delivery. The carrier’s liability for other goods than the goods that were carried is not governed by the CMR, yet by the applicable domestic law. Where article 23 refers to the total or partial loss of ‘the goods’, it gives a provision for the liability for damages as a result of total or partial loss of the goods carried as meant in article 17. The final provision of article 23 (4) (‘no further damage shall be payable’) is an elaboration of the other provisions in article 23 and only relates to damages as a result of total or partial loss of or – applying article 25 – damage to the goods carried. The same applies to article 28 that, in as far as relevant, provides a regulation for the case whereby a claim is issued against the carrier for the loss of or the damage to the goods carried that is not based on the contract of carriage, but on the law. Neither article 23 nor article 28 provides for a regulation of liability for damage to or loss of other goods than the goods carried.’

Since the acids in the land tank had not been carried by road, the Supreme Court held that the CMR did not apply to their contamination.[13] Since the omission to adequately clean the inside of the tank truck qualified as an unlawful act,[14] Cargofoor was liable for the (foreseeable) contamination of the acids in the land tank.

The Supreme Court decision in RTT v. Cargofoor met with little resistance.[15] In fact, the judgement at that time seemed to be in line with prior decisions on the same issue in Germany and the UK.[16] The German BGH had already held as early as 1978 that a consignee’s claim for missed profits was not regulated by the CMR, but was instead governed by domestic law as the convention did not provide for an exhaustive regulation of the carrier’s liability.[17] Besides, the Commercial Court in the UK had held only two years earlier with regard to cleaning costs and loss of production as the carrier had delivered the wrong tank with chemicals:[18]

‘I do not see why the provision should exclude liability for loss of or damage or delay to something other than the goods, provided of course that this has not resulted from loss of or damage or delay to the goods for in the latter event the Convention does indeed limit or exclude liability. The article (and indeed the whole of the relevant parts of Chapter IV) deal with liability in respect of the consigned goods.’

The Belgian Supreme Court later adopted the same approach as the Dutch Supreme Court.[19] In a case whereby the facts and circumstances were very similar to those in Cargofoor v. RTT, the Belgian Supreme Court held that the CMR does not regulate the carrier’s liability for other damages, and ‘more in particular not for the damage incurred to other goods than those carried, which is governed by the applicable domestic law.’

The course of the proceedings

When Transfennica brought its claim for the outstanding freight before the Court of Arnhem, Schenker submitted its counterclaim for the costs. Schenker argued that the Cargofoor precedent also covered contractual claims for its costs in the course of a contract of carriage by road, and the Court of Arnhem agreed.[20] It considered the (breached) obligation to provide adequate information a part of the contract of carriage. As the CMR did not apply to other damages than those to the goods carried, whether claimed in contract or in tort, Transfennica could not rely on the protection of article 23 CMR either. The court thus allowed the counterclaim, but deducted the amount of the outstanding freight from the damages.

The Court of Appeal in Arnhem/Leeuwarden reversed this decision.[21] The Court of Appeal was willing to assume for argument’s sake that the obligation to provide adequate information formed part of the contract of carriage, but held that the contract of carriage was governed by the provisions of the CMR. As other costs than those listed under article 23 (4) CMR cannot be compensated under the conventional system of liability, the Court of Appeal awarded the claim for freight and rejected the counterclaim.[22]

Ultimately, the case was brought before the Supreme Court.[23] The Supreme Court annulled the judgement of the Court of Appeal, and stayed very close to its earlier decision in RTT v. Cargofoor:

‘Article 17 CMR stipulates that the carrier is liable for the total or partial loss of the goods and for damage thereto, occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery. Article 23 (5) CMR provides that if the claimant proves that damage has resulted from delay, the carrier shall pay compensation for such damage not exceeding the carriage charges. The CMR does not provide for an exhaustive regulation of the carrier’s liability. Article 17 only regulates the carrier’s liability for the loss of or damage to goods that were carried by him, as well as for any delay in delivery. For other damages than these, the carrier may be liable under the applicable domestic law (HR 15 April 1994, NJ 1995, 114 (Cargofoor)). The Court of Appeal was right to hold under 4.5 that the contact of carriage between Schenker and Transfennica is ended when Transfennica had delivered the goods in Hamina (HR 17 February 2012, NJ 2012, 289 (Tele Tegelen v. Stainalloy)). The Court of Appeal was wrong, however, to conclude that the breach of Transfennica’s obligation, as alleged by Schenker, to provide the correct information cannot lead to liability of Transfennica on the basis of the contract of carriage. The liability for such a breach does not relate to loss of or damages to the goods carried or to delay in delivery as meant in the CMR. The CMR does not regulate this liability and does not bar the acceptance thereof. That liability must be assessed in accordance with domestic law.’

The next question was: which provisions of the Dutch Civil Code (DCC) then govern the contract of carriage? Dutch law has not incorporated the CMR. Instead, the DCC contains several provisions that limit the carrier’s exposure and closely resemble the corresponding provisions from the CMR. The relevant articles 17 (1) and 23 (1), (2) and (4) CMR for instance more or less correspond with articles 8:1095, 1096 and 1103 DCC. The Supreme Court held, however, that Transfennica could not rely on these domestic provisions as their application did not extend to such losses (either).[24]

In the layered system of the Dutch Civil Code,[25] the carrier’s liability was therefore governed by the general provisions on contractual obligations, more in particular by article 6:74 DCC. This provision stipulates that a debtor is liable for ‘every shortcoming in the performance of an obligation’ and is held to compensate ‘the creditor for the damages he suffers as a result thereof.’ Since the fines, storage costs, truck demurrage and clearance costs were the (foreseeable) result of its shortcoming in relaying the correct reference numbers, Transfennica was fully liable for these losses.[26]

The scope of application of the CMR

The CMR, just as any other international convention on carriage of goods, has a material, a formal and a temporal scope of application. The material scope of application identifies the contracts that are governed by the convention; see in this respect the first part of article 1 CMR: ‘This Convention shall apply to every contract for the carriage of goods by road in vehicles for reward, (…).’[27]

Article 1 CMR explicitly refers to ‘every contract of carriage’. Obviously, this excludes forwarding contracts, warehousing contracts and other (transport related) agreements from the scope of application.[28] On the other hand, the explicit reference to ‘every contract of carriage’ implies that the contract does not need to relate to specific damages to specific goods in the course of a specific voyage. An umbrella contract between a sender and a carrier, covering the underlying individual shipments, is for instance also governed by the provisions of the CMR.[29]

The CMR does not apply to extra-contractual third party claims for damages arising in the course of the contract of carriage. When the driver loses control over the steering wheel, and his truck collides with a traffic light, damages to both the goods in the truck and the traffic light are the likely result. The sender’s claim for damages to the goods under the contract of carriage is then governed by the CMR, but the local municipality’s claim in tort for the damages to the traffic light is not governed by the CMR in the absence of a contract of carriage.

Obviously, this only applies to genuine third party claims. The sender and the consignee cannot circumvent the mandatory CMR regime at will. If the sender simply ignores his existing contract of carriage with the carrier, and decides to claim his damages in tort instead, article 28 (1) CMR ensures that ‘the carrier may avail himself of the provisions of this Convention which exclude his liability of which fix or limit the compensation due.’

All the same, the convention does not cover each and every contract of carriage by road for a reward. The second part of article 1 CMR mentions an additional, and this time formal requirement. The convention applies ‘when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a contracting country, irrespective of the place of residence and the nationality of the parties.’

This formal requirement has hardly raised any issues in practice. A contract for the carriage of goods by road from Singapore to Kuala Lumpur (Malaysia) will not be governed by the convention as neither country is a contracting state. Within Europe and Eurasia, however, where almost every country is a contracting state, the formal requirement effectively ensures that the CMR does not apply to domestic carriage by road.

Finally, the scope of application of the convention is also limited in time. The temporal scope of application follows from article 17 CMR, which reads: ‘The carrier shall be liable for the total or partial loss of the goods and for damage thereto occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery.’[30]

This is a wide temporal scope of application, certainly in comparison to other conventions on international carriage. Whereas the Hague-Visby Rules only apply in the ‘tackle-to-tackle’ period and the Montreal Convention (in principle) only applies in the ‘airport-to-airport’ period,[31] the CMR in fact covers the entire duration of the contract of carriage. This makes considerable sense though, as the carriage of goods by road hardly ever requires a port or an airport. The carrier will generally accept the goods for transport at the premises of the sender just as he will generally deliver them to the consignee at the agreed destination. The CMR then governs the carrier’s liability in that entire period between receipt and delivery.

The two different rules of article 17 (1) CMR

The difficulty with article 17 CMR is that it not only defines the mandatory period of responsibility, but furthermore explicitly prescribes that the carrier is liable ‘for the total or partial loss of the goods and for damage thereto’ in that period between receipt and delivery. Clearly, the ‘goods’ in the sense of article 17 (1) CMR are ‘goods in the care of the carrier’, and this has caused the Supreme Court to read the entire provision as a (material) scope rule; i.e. the convention only applies when there is either loss of or damage to the goods carried in the period between receipt and delivery.

It is submitted that this reading fails to distinguish between the two different rules of article 17 (1) CMR, i.e. the temporal scope of application on the one hand and the liability of the carrier for damages to the goods in his care on the other. The question whether the convention applies, is not in any way connected to the question whether the goods in the care of the carrier suffered any damages.[32] In fact, these two questions need to be answered in a certain order. First, it must be established whether the convention applies, and only when it does the question arises whether the carrier is liable under the provisions of the convention.

This point can perhaps be illustrated through a comparison with the scope of application of the HVR. These rules apply to the contract of carriage when the material requirements of articles I (b) HVR and formal requirements of X HVR are met,[33] but they do not apply to the entire contract of carriage.[34] Article I (e) HVR restricts the mandatory scope of application of the convention to ‘the period from the time when the goods are loaded on to the time they are discharged from the ship.’ The rules apply mandatorily within this period,[35] and article VII HVR in fact explicitly flags the freedom of contract outside the ‘tackle-to-tackle’ period.[36]

Article I (e) HVR merely relates to the period of responsibility; it does not regulate the carrier’s liability in any way and there is no confusion between the scope of the convention and its liability system.[37] The question whether the convention applies logically precedes the question as to (the sort and quantum of) the damages payable under the convention. That latter question only surfaces once the application of the HVR has been established. When the convention indeed applies, the carrier’s liability under the HVR ‘for any loss or damage to or in connection with the goods’ is then calculated on the basis of the destination value of the goods,[38] yet limited to either 667 SDR/collo or 2 SDR/KG.[39]

The HVR do not contain a provision similar to article 23 (4) CMR. The reach of ‘any loss or damage to or in connection with the goods’ is therefore left to the court seized,[40] and the outcome differs per jurisdiction.[41] Whereas English courts may actually award consequential losses ‘in connection with the goods’ if they are not an unlikely result in the given circumstances,[42] Dutch courts take the view that the HVR ‘do not regulate consequential and indirect losses.’[43] This effectively means that other damages than those to the goods are in practice not awarded as they are validly excluded in the bill of lading in the absence of a mandatory regulation.[44]

The system of articles 17 and 23 CMR

It is submitted that the claim for the costs in Transfennica v. Schenker should have been tackled in the same way. The court should first of all decide on the material and formal application of the convention, and only then whether a certain loss or damage is mandatorily covered by the convention. The first question is therefore: is it a contract for the carriage of goods by road for a reward between two different countries of which at least one is a contracting country?

If not, then the relation between Transfennica and Schenker would have been governed by the law applicable to the contract. Assuming that the application of article 5 Rome I leads to Dutch law, and assuming that the specific provisions of Book 8 DCC do not cover fines and costs in the course of a contact of carriage by road, then the general provisions on contractual obligations in Book 6 indeed apply. The outcome would then have been exactly the same as in the Supreme Court decision.

If so, however, article 17 (1) CMR ensures that the convention applies between the time of receipt and the time of delivery of the goods, and article 41 CMR prescribes that ‘any stipulation which would directly or indirectly derogate from the provisions of this Convention shall be null and void.’ This implies that Transfennica and Schenker were perfectly free to contractually arrange any unregulated issues, e.g. the carrier’s right of retention, the termination of the contract or the shipper’s liability, but they were equally free not to arrange anything at all. In either case, these unregulated issues would again be governed by the law applicable to the contract, but this does not affect the application of the convention. Where the convention gives general rules, these general rules also govern the unregulated issues. The one year time bar of article 32 (1) CMR for instance refers to ‘an action arising out of carriage under this Convention’,[45] and therefore also applies to a claim for outstanding freight or even a claim in declaratory proceedings.[46]

If so, and if the issue at hand concerns the carrier’s liability, then the provisions of the convention indeed regulate the contract of carriage exhaustively.[47] The liability of the carrier, any limitation of that liability and the question whether the claim is payable; these questions are solely governed by the provisions of the convention. The contracting parties cannot derogate from the provisions of the convention, and domestic law does not come into play at all. This may be derived from the unanimous decision of the House of Lords in Sidhu v. British Airways:[48]

‘The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law. (…) The domestic Courts are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to the setting alongside the Convention of an entirely different set of rules which would distort the operation of the whole scheme.’[49]

The decision in Sidhu v. British Airways obviously related to the Warsaw Convention,[50] but it is submitted that its reasoning equally applies to the CMR.[51] In as far as the carrier’s liability is at stake, the provisions of the CMR indeed apply exhaustively. There is no room for the application of domestic law, but there is really no need for the application of domestic law either.[52]

An example may clarify how such a closed system then operates. Staying close to the case at hand, the example of a contract for the carriage of goods by road for a reward between the Netherlands and Finland then seems apt. Since the requirements of article 1 CMR are met, the convention applies to the contract. When the goods are damaged during the voyage, the carrier is liable for these damages in accordance with articles 17 (1) and 23 (1), (2) and (3) CMR.

When the goods are damaged during the voyage, but there are in addition further costs that qualify as ‘carriage charges, customs duties and other charges’, the CMR also applies to the contract of carriage. The carrier is obviously still liable for the damage to the goods, and he is furthermore liable for these duties and charges pursuant to article 23 (4) CMR.[53]

When the goods are damaged during the voyage, and as a result thereof the consignee’s production plant has to shut down for several days to clean the machinery, the CMR still applies to the contract. The carrier is liable for the damage to the goods, but he is not liable for the consequential losses as article 23 (4) CMR in fine prescribes that ‘no further damage shall be payable.’

When the goods are damaged during the voyage, but the sender was furthermore fined by the authorities and had to make extra storage costs, again the CMR still applies to the contract. The carrier is liable for the damage to the goods, but he is not liable for the fine and storage costs as they do not qualify as ‘carriage charges, customs duties and other charges’ and article 23 (4) CMR in fine prescribes that ‘no further damage shall be payable.’

Surely, the outcome is then the same in the absence of any damage to the goods. The CMR still applies to the contract, and the carrier is not liable for the fine and storage costs as they do not qualify as ‘carriage charges, customs duties and other charges’ and article 23 (4) CMR in fine prescribes that ‘no further damage shall be payable.’ A different reading ‘would distort the operation of the whole scheme.’[54]

The contract between Transfennica v. Schenker was governed by the convention. It was a contract for the carriage of goods by road for a reward between the Netherlands and Finland, and the carrier made his unfortunate mistake that caused the damages in the period between the receipt and delivery of the goods. Since the convention applies, the carrier’s liability is exhaustively governed by the provisions of the convention. Article 23 (1), (2) and (3) CMR limit the carrier’s liability. Article 23 (4) CMR stipulates that the carrier is still liable for the carriage charges, customs duties and other charges, but also prescribes that ‘no further damage shall be payable’ in the absence of intent or willful misconduct. The counterclaim should therefore not have been awarded.[55]

Obviously, this leaves the injured party with the problem that fines, storage costs and consequential losses will then never be payable under the liability system of the CMR. It is submitted, however, that this will hardly make a difference in practice at the end of the day.[56] The general provisions on contractual obligations in Book 6 DCC are not mandatory. Given the decision in Transfennica v. Schenker it is therefore only a matter of time before consignment notes start circulating with an express exclusion of liability for any other losses or damages than those to the goods carrie

[1] There is a difference in the strength of these exemptions. Article 17 (2) CMR lists the ‘regular exemptions’; both their occurrence and the causal link need to be proven; article 17 (4) CMR lists several ‘special risks’ of which article 18 (2) CMR then presumes that their occurrence caused the damages.

[2] See article 41 CMR. The contracting parties are therefore free to define their rights and obligations under the contract of carriage outside the scope of application of the CMR. The carrier may for instance negotiate certain contractual exemptions.

[3] The law applicable to the contract of carriage is then identified by article 5 Rome I (when the case is brought before the court of an EU Member State).

[4] HR 18 December 2015, RvdW 2016/93, S&S 2016/37.

[5] F.G.M. Smeele said in his contribution at the Symposium – 60th anniversary of the CMR on 19/20 May in Rouen (France) that the costs could also be qualified as mitigation costs, i.e. costs that had to be made in order to preserve the goods.

[6] The amounts of the claim and counterclaim were also not in dispute. The parties did disagree on the question whether the contract of carriage actually encompassed an obligation for Transfennica to provide (adequate) information on the loading reference numbers. This is in fact still an open question. The Supreme Court has decided the matter on the assumption that Transfennica was indeed held to provide adequate information under the contract of carriage, but it has referred the case to the Court of Appeal in ‘s Hertogenbosch to deal with this specific question.

[7] It is tempting to label these costs as consequential losses, but that term is perhaps better reserved for financial losses (or missed profits) as a result of the damages to the goods in the care of the carrier. This is also in line with the definition given by J.H.J. Teunissen in Verbindend Recht, Liber Amicorum K.F. Haak (Kluwer Deventer 2012) at p. 505.

[8] HR 15 April 1994, NJ 1995, 114, S&S 1994/72 (Cargofoor).

[9] First of all, the goods in the care of Cargofoor had in fact been damaged during the voyage. Secondly, RTT’s claim for damages to the goods in the land tank had been extra-contractual whereas Schenker’s counterclaim for costs was contractual. These differences did not play a role in the considerations of the Supreme Court in Transfennica v. Schenker though.

[10] In line with a judgement of the Court of Appeal ‘s Hertogenbosch of 10 June 1991, S&S 1992/44.

[11] Remarkably enough, this was the Court of Appeal in ‘s Hertogenbosch again, the same court that had held one year earlier that damages to other goods and consequential losses were not payable under the CMR. Hof ‘s Hertogenbosch 26 October 1992, S&S 1993/28.

[12] HR 15 April 1994, NJ 1995, 114, S&S 1994/72 (Cargofoor).

[13] The discussion whether the CMR governs the unlawful act on the basis of article 28 CMR is therewith only of academic interest. It is submitted, however, that this unlawful act against Eastman is indeed governed by the provisions of the convention. First of all, the discharging process forms an integral part of the contract of carriage. Secondly, Eastman had instructed RTT to carry the acids form Rotterdam to Tubize. The contract between Eastman and RTT was thus governed by the CMR, and there is really no sound reason for Eastman to acquire a better position simply because RTT had instructed a sub-carrier. See in this respect also § 434 HGB, Seagram v. TTI [2003] 2 Lloyd’s Rep. 172 and P. de Meij Samenloop van CMR-Verdrag en EEX-Verordening (Kluwer Deventer 2003) p. 105/106

[14] Under both Dutch and Belgian law, see under 3.2 of the Court of Appeal judgement and 3.5 of the Supreme Court judgement.

[15] Although still rather hesitantly in Liber Amicorum Jacques Putzeys (Bruylant Bruxelles 1996) at p. 201, K.F. Haak later welcomed the judgement in Uitspraak & Uitleg (Kluwer Deventer 1996) p. 40.

[16] These cases were not really in line with RTT v. Cargofoor. In both cases the wrong goods were delivered, but in a sound condition, these cases are thus actually better in line with Transfennica v. Schenker.  See also J.H.J. Teunissen in Verbindend Recht, Liber Amicorum K.F. Haak (Kluwer Deventer 2012) at p. 504.

[17] BGH 27 October 1978, I ZR 30/77, VersR 1979, 276.

[18] Shell Chemicals v. P&O Roadtanks [1993] 1 Lloyd’s Rep. 114, per Saville J.

[19] Hof van Cassatie 16 January 2009, Rechtskundig Weekblad 2009-10 p. 738 (with annotation F. Stevens).

[20] Rechtbank Arnhem 26 September 2012, S&S 2013/68.

[21] Hof Arnhem/Leeuwarden, 4 march 2014, S&S 2014/106.

[22] The Court of Appeal, unlike the court in first instance, was not persuaded by the Cargofoor precedent. It distinguished contractual claims from extra-contractual claims. Whereas the claim in RTT v. Cargofoor had been extra-contractual, Schenker’s counterclaim for consequential losses was clearly contractual. The Court of Appeal considered ‘the expansion of the rule in the Cargofoor-judgement to cases as the one at hand not opportune.’

[23] HR 18 December 2015, RvdW 2016/93, S&S 2016/37.

[24] Articles 8:1095 and 1096 DCC prescribe that the carrier must deliver the goods in (the same) good order and condition as in which he received them, and on time. Article 1103 DCC stipulates that the shipper (and consignee) cannot claim anything other than the damages to the goods in accordance with their shipment value ‘in as far as the carrier is liable for non-compliance with his obligations under articles 8:1095 and 1096 DCC (…)’.

[25] The DCC works its way up from general rules to very specific rules. Book 3 DCC covers general property law, Book 6 deals with obligations, including contractual obligations, and Book 8 governs contracts of carriage. The general provisions of Books 6 (and 3) apply to all contracts, and therefore also to contracts of carriage in the absence of tailor-made provisions in Book 8.

[26] See for domestic German law § 433 HGB: ‘If the carrier is liable for the breach of a contractual duty connected with the performance of the carriage of the goods, his liability for damage which has not resulted from loss of or damage to the goods or from non-compliance with the delivery period and which is not damage to goods or per-sons, is limited also, namely to three times the amount payable in the event of loss of the goods.’

[27] Article 1 (4) CMR lists three exceptions though, i.e. carriage performed under the terms of any international postal convention, funeral consignments and furniture removal.

[28] Under English law, the CMR also applies to a road leg in the course of a multimodal contract of carriage, see Quantum Corp. v. Plane Trucking [2001] Lloyd’s Rep. 133, affirmed in Datec v. UPS [2007] 2 Lloyd’s Rep. 114. It is different under German and Dutch law, see BGH 17 July 2008, TranspR 2008, 365 (summarized and commented upon by T. Eckardt in EJCCL 2009, 39), HR 1 June 2012, NJ 2012, 516 (Godafoss) and M. Spanjaart, Godafoss, the applicability of the CMR within multimodal contracts of carriage, TranspR 2012, 278.

[29] Gefco v. Mason [1998] 2 Lloyd’s Rep. 585. Mason (as sender) and Gefco (as carrier) had agreed on an umbrella contract to cover regular transports from the UK to France.  At a certain point, Mason stopped paying the freight, and Gefco initiated proceedings. Mason argued that Gefco had breached several of its contractual obligations under the umbrella contract, and that he had suffered commercial damages as a result thereof. Gefco obviously relied on article 23 (4) CMR, but Mason argued that an umbrella contract did not satisfy the material scope of application as the CMR only covered the individual transports. The Court of Appeal agreed with Gefco, and Morritt L.J. held: ‘It is apparent that the contract in this case fell squarely within the terms of art. 1.1. (…) I do not accept that the contracts to which the Convention applies are necessarily limited to those relating to specific and ascertained goods’.

[30] See HR 17 February 2012, NJ 2012, 289, S&S 2012/60 (Tele Tegelen v. Stainalloy) for the meaning of receipt and delivery.

[31] Article 1 (e) HVR and 18 (2) MC, see also the discussion in the next paragraph.

[32] Gefco v. Mason [1998] 2 Lloyd’s Rep. 585.

[33] Article I (b) HVR:  ‘Contract of carriage’ applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.

Article X HVR: The provisions of these Rules shall apply to every bill of lading relating to the carriage of goods between ports in two different States if (a) the bill of lading is issued in a contracting State, or (b) the carriage is from a port in a contracting State, or (c) the contract contained in or evidenced by the bill of lading provides that these Rules or legislation of any State giving effect to them are to govern the contract; whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.

[34] See in this respect also article 16 CMNI. Article 16 (1)  CMNI stipulates that the carrier is liable for loss of or damage to the goods between receipt and delivery. Article 16 (2) then reads: ‘The carrier’s liability for loss resulting from loss or damage to the goods caused during the time before the goods are loaded on the vessel or the time after they have been discharged from the vessel shall be governed by the law of the State applicable to the contract of carriage.’

[35] Article III (8) HVR.

[36] Article VII HVR reads: ‘Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to, or in connection with, the custody and care and handling of goods prior to the loading on, and subsequent to the discharge from, the ship on which the goods are carried by sea.’ Liner bills of lading will therefore invariably contain a so-called ‘before and after’ clause, excluding all liability before loading and after discharge of the goods.

[37] In fact, the HVR do not contain a specific provision similar to article 17 (1) CMR or 18 (2) MC. The carrier’s liability for damages to the goods in that period is implied in the system of liability in articles III and IV HVR.

[38] See article IV (5) (a) and (b) HVR, unless there is wilful misconduct on the part of the carrier of course (article IV (5) (e) HVR .

[39] The HVR have been incorporated in the DCC; the domestic provisions in fact explicitly exclude the carrier’s liability for other damages than those to the goods. Article 8:388 DCC corresponds with article IV (5) HVR; it limits the carrier’s liability to the destination value of the goods with a maximum of 667 SDR/collo or 2 SDR/KG. Article 8:387 DCC provides that the shipper is not entitled to any other amounts than those mentioned in article 8:388 DCC. The Parliamentary History of article 8:387 DCC reads at p. 398: ‘(…) all further damages are excluded from Compensation.’ In a sense, the provision in article 8:387 DCC is therefore quite similar to the last part of article 23 (4) CMR. See for case e.g. Rechtbank Amsterdam 17 September 2003, S&S 2004/107.

[40] In accordance with the court’s interpretation of its meaning under the convention, and thus not under any applicable domestic law.

[41] Just as the notions of ‘successive carriage’ and ‘customs duties’ are unfortunately interpreted differently.

[42] The Heron II [1967] 2 Lloyd’s Rep. 457 and see also S. Geense Vergoedbare schadevormen in het Engelse vervoerrecht en het leerstuk van ‘remoteness of damage’ TVR 2010 p. 10.

[43] Hof ‘s-Gravenhage  22 March 2005, S&S 2005/113.

[44] See e.g. article 8 of the MSC bill of lading: ‘In no event shall the Carrier be liable for consequential damages or for any delay in scheduled departures or arrivals of any Vessel or other conveyances used to transport the Goods by sea or otherwise. If the Carrier should nevertheless be held legally liable for any such direct or indirect or consequential loss or damage caused by such alleged delay, such liability shall in no event exceed the Freight paid for the carriage.’

[45] HR 11 February 2000, NJ 2000, 420; HR 18 December 2009, S&S 2010, 25. It is the same under German law, see BGH 19 April 2009, I ZR 90/04 under 24: ‘Nach der ständigen Rechtsprechung des Senats gilt die Verjährungsregelung des Art. 32 CMR nicht nur für die sich aus der CMR ergebenden Ansprüche, sondern auch für alle mit einer CMR-Beförderung in einem irgendwie gearteten sachlichen Zusammenhang stehenden, aus dem nationalen Recht folgenden Ansprüche.’ Or in a rather free English translation: ‘In accordance with standard Senat case law the time bar provision of article 32 CMR not only applies to claims under the CMR, but also to all claims in connection with CMR transportation that follow from domestic law.’

[46] This reveals a strange inconsistency. The Supreme Court accepts in these cases that certain provisions of the convention apply to unregulated issues, but it does not apply the (provisions of the) convention to other losses than those to the goods carried in Transfennica v. Schenker even though the material, formal and temporal requirements of the convention were met.

[47] This was also how Gefco v. Mason was decided. The court first established that the umbrella contract was in fact a contract in the sense of article 1 CMR, and denied Mason’s claim as consequential losses were not payable under the convention. Gefco v. Mason [1998] 2 Lloyd’s Rep. 585.

[48] Sidhu v. British Airways [1997] 2 Lloyd’s Rep. 76, per Lord Hope of Craighead.

[49] Once it has been established that the MC applies, and thus applies exhaustively to the carrier’s liability, article 22 (3) MC limits the carrier’s liability ‘in the case of destruction, loss, damage or delay is limited to a sum of 17 Special Drawing Rights per kilogram.’  Article 8:1357 DCC, which in light of Sidhu v. British Airways obviously does not apply to international air carriage, explicitly stipulates that the carrier has ‘no other right’, see also 8:387 DCC.

[50] The MC is the successor of the Warsaw Convention; it more or the less follows the same pattern as the CMR. The convention applies to international contracts of carriage by air between two contracting states, and article 18 (1) MC regulates the temporal scope of application as well as the carrier’s liability: ‘The carrier is liable for damage sustained in the event of the destruction or loss of or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air.’ Article 18 (3) MC then provides that the period of liability covers ‘the period during which the cargo is in the charge of the carrier’, but article 18 (4) first sentence MC ensures that it  ‘does not extend to any carriage by land, by sea or by inland waterway performed outside an airport.’

[51] See also I. Koning Aansprakelijkheid in het luchtvervoer (Paris Zutphen 2007) p. 245 and, albeit with slightly more caution, A. Messent & D.A. Glass, CMR: Contracts for the International Carriage of Goods by Road (LLP London 2000) p. 13, and F. Stevens in his annotation of the Belgian Supreme Court judgement of 16 January 2009, Rechtskundig Weekblad 2009-10 p. 739

[52] It is a misunderstanding that the CMR does not cater for fines, storage costs and consequential losses etc. The CMR does allow for compensation of such damages, but only when they are caused by intent or wilful misconduct (see article 29 CMR). Obviously, the convention must apply for article 29 CMR to take effect.

[53] The Dutch Supreme Court has adopted the strict interpretation of these ‘carriage charges, customs duties and other charges’ in Philip Morris v. Van der Graaf, HR 14 July 2006, NJ 2006, 599, S&S 2007/20. These charges are therefore limited to charges that  are connected to the normal performance of the contract of carriage (without any events).

[54] Sidhu v. British Airways [1997] 2 Lloyd’s Rep. 76.

[55] This approach also solves the theoretical problem that the carrier would find himself confronted with two different regimes for one and the same omission. If it assumed for argument’s sake that one of the containers was filled with oranges, and that they perished as a result of the arrest, then that specific claim would have been governed by the convention whereas the consequential losses would have been governed by Dutch law as the convention did not apply.

[56] There is a (possibly significant) complication though: if the contract is not covered by the CMR, but instead by domestic Dutch law, the carrier would be allowed to exclude liability for any intent or wilful misconduct of his servants, agents and subcontractors. Under the CMR, however, such an exclusion would be null and void pursuant to articles 3 and 41 CMR.

 

Transfennica v. Schenker, the system of articles 17 and 23 CMR TranspR 2016, 383;